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Financial Prudence Behaviour -Influence of Phone Card Use Preferences and Money Attitudes

Influence of Phone Card Use Preferences and Money Attitudes on Financial Prudence Behaviour

ABSTRACT

This study is on the influence of phone card use preferences and money attitudes on financial prudence behaviour. 179 participants comprising 94 males, and 85 females, age range between 19 to 34 years, mean of age 22.34, standard deviation 2.94 selected through convenient sampling of Continuing Education Programme (CEP) students of Departments of Public Administration and Management from Anambra State University Igbariam Campus. Participants response were obtained on money attitudes scale and financial prudence scale respectively. Multivariate design, one way an over and pearson product moment correlation coefficient statistics were used to analyze the data. Findings revealed that phone card use preference had no significant influence on financial prudence behaviour F (2.74), P >.05; Globacom had mean score of 13.20 and standard deviation of 3.11, MTN had mean score of 14.04 and standard deviation of 2.96 while Etisalat had mean score of 12.91 and standard deviation of 2.87.Money attitudes with mean score of 58.36  and standard deviation of 8.76 has significant relation on financial prudence with financial prudence of mean score 13.76 and standard deviation of 2.87, ( r (0.11, P < .001). Based on the findings, it was recommended that students should ensure that they make ample use of the free air time bonuses given to them by network providers to manage their financial prudence behaviour.

CHAPTER ONE

INTRODUCTION

This study will centre on the influence of phone card use preference and money attitudes on financial prudence among UNIZIK students.

Phone Card Use is the willingness of consumer/customer to make choice of which network to subscribe to, and make use of their services. The customers are very important and play a crucial role in any process of marketing. Today, customers are the kings of the market because the customer loyalty and customer preference are built by the products and the services offered to the customers, and they seek for the more benefit and money’s worth for the amount they spend. That is where the concept of customer preference and customer behaviour comes, because the customers make the marketers to rethink about designing, the product and services, (Chakravorty, 2008). Although the mobile telephone industry has reached maturity, high growth and fashion trend cycles keep accelerating. The presence of more and more brands with new features has created a competitive environment that is unprecedented (Rutter & Edwards, 1999). Past research mostly used survey methods that directly measure consumers attitudes towards products and their attitudes. The draw back of such methods (Lang & Crown, 1993), is the possibility of interaction effects among attributes being over looked. It is possible that the preferences of the consumers may depend on the joint influence of product attributes such as quality, style, features and price. It is therefore necessary that the joint effect of several product attributes on the final decision to purchase a specific item should be taken into consideration when researching consumer purchase decisions.

The concept of conjoint analysis is described by (Hair, Anderson, Tatham & Black, 1998) as follows: Conjoint analysis is a multivariate technique used specifically to understand how respondents develop preferences for products or services. It is based on the simple premise that consumers evaluate the value of a product or service by combining the separate amounts of value provided by each attribute. Sudman and Blair (1998) emphasize that it is not a data analysis procedure like factor analysis or cluster analysis. It must be regarded as a type of “thought experiment” designed to show how various elements of products or services (price, brand, style) predict customer preferences for a product or service. Kotler (2000) defines conjoint analysis as a method for deriving the utility values that consumers attach to varying levels of a product’s attributes Churchill and Iacebucci (2002) refer to conjoint analysis as measurement which rely on the ability of respondents to make judgments about stimuli. These stimuli represent some predetermined combinations of attributes, and during a labouratory experiment, respondents are asked to make judgments about their preferences for various attribute combinations. The basic aim, therefore, is to determine the factors they must prefer.

The value of conjoint analysis lies in the fact that it estimates how much each of these attributes is valued, and has to do with the notion, that the relative values of things considered jointly can be measured when they might not be measurable if taken out at a time. Certainly, these processes usually take place in the minds of the consumers before they willingly decide to make a preference of the services offered by the telecommunications companies. Hence this study is actually interested on the preferences they make on the service that are available within the vicinity. In fact which service do they prefer most and which do they prefer list, particularly as they relate to their estimates towards money and financial prudence.

Money attitudes play a pivotal role in the lives of emerging adults as they finish secondary school, begin leaving home, prepare to manage their own homes, and start their own families. They enter a time of life that is not just a brief period of transition into adult roles but is a distinct period of the life course, characterized by change and exploration of possible life directions (Arnett, 2000). For most youth from industrialized countries, the late teens to mid 20’s are time of profound change and importance. Influenced by family, peers, mass media, and educational ideologies, the course for much of the remaining years of life is set for the emerging adult. Despite its potential importance, money attitudes and their relationship to financial behaviours have remained relatively unexplored in fairly scholarship, even in the social psychology literature which has extensive attitude – behaviour research. Evidence suggests that attitude like power, anxiety and distrust precede the development of money behaviours (Roberts & Jones, 2001). Therefore knowledge of money attitudes may help inform parents, family members, and financial educators who seek to encourage, teach, and otherwise assist youth with important and inevitable financial choices before them (Acock & Bengtson, 1978; Blee & Tickamyer, 1995; Thornton, Alwin, & Cambum, 1983). In contemporary society, the use of money permeates many, if not most aspects of adult life. This pervasiveness illuminate the importance of money attitudes that lied to positive behaviours such as living within ones means, paying bills on time, avoiding excessive debt and so forth.

Hary Eker said “There is a secret psychology of money. Most people do not know about it. That is why most people never become financially successfully successful. A lack of money is not the problem it is merely a symptom of what is going on inside of you”. This can give us picture of the issue of discuss – financial prudence. Pillai, Carlo, & D’ Souza (2010) state that with the dawn of the era of consumerism and the marketing mania, wants are tremendously exceeding needs and it has been widely observed that widespread consumerism and westernization have lured the people into dissipating their earrings at an alarming rate. Not only the hard-earned money that is being dissolved into the irresistibly tempting buying options, plethora of opportunities are there to effect purchases without legal tender of debit card balance, thanks to the burgeoning growth of credit accessibility to prospective customers. The plight of young generation is even more vulnerable. With availability of generous pocket money, personal credit cards, access to credit cards of family members or high-paid jobs at prime age, young people are faster becoming impulsive spenders and prove reckless often. Most of today’s young adults, although smart and independent, scarcely understand the value of money because of the desire to adopt extravagant lifestyles, in addition to the above mentioned factors. Young adults under the age of 30 are now the fastest growing age group filing for bankruptcy. Moreover, there has been an alarming rise in college suicides because of credit card and student loan debt (Lee, 2008).

Financial prudence and literacy could go a long way in reducing this anomaly. Financial prudence is the acceptance of a degree of caution in the exercise of judgment needed when making required estimates under conditions of uncertainty. In other words, it refers to the practice of making well-informed financial decisions and ensuring that expenditures is never in excess of earning capacity of an individual. Our conventional wisdom reminds us to be parsimonious in spending money. The frugal spending habit in turn, will help enhance savings, which of course, can be invested into returnable diversified financial portfolios and with credible institutions (Pillai, Carlo & D’souzo  2010). Shafrin and Wiesen (2009) stated that throughout history, prudence has been seen as one of mankinds ultimate virtues. Aristotle defined prudence of phronesis as man’s ability to think well about the nature of the world. He also stated that the full performance of man’s functions depends upon a combination of prudence and moral virtue; virtue ensures the correctness of the end of which we aim, and prudence that of the means towards it. Thomas Aquinas believed prudence was one of mans four principal virtues along with temperance, justice, and fortitude. Seminal work by Kimball (1990) claims that an individual is prudent only if the third derivative of an agents utility function is positive. Prudence has been shown to be an important factor in areas such as interpersonal savings decisions (Kimball, 1990), asset allocation (Gomes and Michaelides, 2005) to preventive care decisions (Courage and Rev, 2006).

Statement of the Problem

From all indications, information communication has come to stay and it is carrying customers for the players on the sector. Customers are the kings of the market because the customer loyalty and customer preference are built by the products and the service offered to the customers, and they seek for the more benefit and money’s worth for the amount they spend. Ruther and Edwards (1999) found that although the mobile telephone industry has reached maturity, high growth and fashion trend cycles keep accelerating. The presence of more and more brands with new features has created a competitive environment that is unprecedented. Consumers make judgment about their preferences for various attribute combinations. Certainly these processes usually take place in the minds of the customers before they willingly decide to make a preference of the service offered by the telecommunication companies. Among the selected mobile phone providers, this study wants to verify the network that students mostly prefer. This is particularly necessary because they must have taken a lot of things into consideration before deciding to make their preference.

Money attitudes no doubt play a pivotal role in the lives of emerging adults as they finish secondary school, begin leaving home, and start their own families. The three money attitudes (Power– prestige, anxiety and distrust) are approached by students without clear view of what might be required of them. It is said that money can purchase power, prestige and control over others. This view reflects a larger contemporary theme. We know this is the age of global economy that has been fueled by advancing technologies, exploding information possibilities, and deepening markets. With this trend it becomes a source of worry on how the students could cope with their financial prudence.

It has been said that there is a secret psychology of money. That is why most people do not know about it. That is why most people never becomes financially successful. A lack of money is not the problem, it is merely a symptom of what is going on inside of you that is a problem.

This study seeks to verify the influence phone card use preference and money attitudes have on financial prudence behaviour among students.

Purpose of the Study

First, the study is intended to determine the influence of students phone card use preference on their financial prudence.

Secondly, it will ascertain the influence money attitude have on financial prudence.

Finally, it will help students to see reason on how best to sustain effective financial prudence in the course of their academic pursuit.

Research Questions

Will there be any influence between students phone card use preferences and their financial prudence’s behaviour?.

Will money attitudes behaviour have any significant influence with financial prudence behaviour?.

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